Even as severe cash shortages at banks and ATMs continue to put commom man in a fix, ministry of finance Santosh Gangwar, while talking to a news channel, tried to calm the nerves.

Gangwar said along with other cash denominations, more number of the new Rs 500 notes will be dispensed from the ATMs at the earliest.

Reuters

He said things will definitely improve in the coming days, and the government is committed to eradicate black money from the economy. He said prime minister Narendra Modi has asked for 50 days to flush out unaccounted wealth, and such a big exercise will lead to hiccups for some people.

On the new tax laws, the ministry of finance said it is an opportunity for people possessing black money to come clean within the stipulated time frame.

Providing a window to black money holders, the government on Monday proposed to levy a total tax, penalty and surcharge of 50 percent on the amount deposited post demonetisation while higher taxes and stiffer penalty of up to 85 percent await those who don't disclose but are caught.

Nearly three weeks after Prime Minister Narendra Modi announced junking high denomination Rs 500 and Rs 1,000 notes, Finance Minister Arun Jaitley introduced a bill to amend the Income Tax law which also provides for black money declarants a mandatorily depositing of 25 percent of the amount disclosed in anti-poverty scheme without interest and a four-year lock-in period.

Those who choose to declare their ill-gotten wealth stashed till now in banned Rs 500 and Rs 1,000 notes under the Pradhan Mantri Garib Kalyan Yojana 2016, will have to pay a tax at the rate of 30 percent of the undisclosed income.

Additionally, a 10 percent penalty will be levied on the undisclosed income and surcharge called PMGK Cess at the rate of 33 percent of tax (33 percent of 30 percent).

Further, the declarants have to deposit 25 percent of the undisclosed income in a scheme to be notified by the government in consultation with the Reserve Bank of India (RBI).

The money from the scheme would be used for projects in irrigation, housing, toilets, infrastructure, primary education primary health and livelihood so that there is justice and equality, said the Statement of Objects and Reasons of the Bill.